Declaration of Basic Policy
- Foster credit card industry development to provide consumer credit widely.
- Promote fair and sound practices aligned with global best standards.
- Encourage efficient payment systems, competition, and transparency.
- Institure mechanisms to protect and educate credit cardholders.
Scope and Coverage
- Governs all credit card issuers, acquirers, and all credit card transactions.
Supervision by Bangko Sentral ng Pilipinas (BSP)
- BSP supervises credit card issuers and acquirers.
- Powers include:
- Issuance of uniform rules and conduct standards, with penalties.
- Conducting examinations for compliance.
- Oversight of adherence to laws and regulations.
- Determining reasonableness of fees and charges and issuing related regulations.
Definitions of Key Terms
- Clear definitions of critical terms such as acceleration clause, acquirer, balance transfer, billing cycle, card association, cash advances, credit card and issuer, credit card limit, default, finance charges, installment purchases, membership fee, minimum amount due, outstanding balance, statement cut-off date, statement of account, supplementary card, etc.
Risk Management Requirements
- Credit card issuers and acquirers must establish documented risk management systems.
- Systems must cover organizational setup, information management, accounting policies, functions, and internal controls.
Credit Card Issuance Requirements
- Issuers must conduct Know Your Client (KYC) procedures before issuing cards.
- Exercise diligence to ensure applicants have good credit and financial capacity.
Service Level Agreement and Merchant Due Diligence
- Merchant agreements must require merchants to verify cardholder identity.
- Card issuers may verify or confirm questionable purchases with cardholders.
Credit Card Limit Establishment and Changes
- Credit limits based on cardholder credit standing and capacity.
- Issuers may change limits but must notify cardholders.
- Cardholders may decline increases or request adjustments.
Finance Charges
- Imposed on unpaid amounts.
Mandatory Disclosure of Information
- Issuers must disclose:
- Finance charges after due dates.
- Interest rate expressed monthly or annually.
- Penalty/late fees and basis thereof.
- Methods of computing interest and charges.
- Other fees (membership, processing, over-limit, collection, legal fees).
- Currency conversion methods for foreign transactions.
- Reminder that paying less than total due increases interest and repayment time.
- BSP may require other disclosures.
- Information should be understandable and may appear quarterly.
Disclosure of Computations
- Detailed explanation and clear illustrations of fee computations required.
- BSP to set implementation date.
Notification on Changes in Computation and Fees
- Cardholders must be notified 90 days in advance.
- Cardholders can terminate account if changes are unacceptable.
- BSP may defer compliance deadlines for system adjustments.
Over-the-Limit Transactions
- Allowed at issuer's discretion with prominently disclosed fees.
Liability on Lost or Stolen Cards
- Cardholders liable for transactions before reporting loss/theft.
Confidentiality of Cardholder Information
- Strict confidentiality except:
- With cardholder consent.
- Exchange with credit bureaus, associations.
- Court or authorized government orders.
- For third-party providers assisting issuer.
- Insurance purposes.
- Fraud investigation and risk mitigation.
- Recipients bound to confidentiality.
Customer Assistance Unit
- Issuers must have unit to promptly resolve complaints, inquiries, and requests.
Billing Error or Discrepancy Complaints
- Cardholders have 30 days to report errors.
- Issuers must act within 10 business days.
Debt Collection Practices
- Issuers may use reasonable legal means.
- Must observe good faith, reasonable conduct, and avoid unscrupulous acts.
- Harassment or abuse prohibited by BSP standards.
Use of Third-Party Collection Agents
- Issuers may engage qualified agents for services including debt recovery.
Notification of Account Endorsement to Collection Agency
- Issuers must inform cardholder in writing before endorsement.
- Must disclose agency name and contact details.
- Only one agency may be authorized at a time.
Communication in Debt Collection
- Modes of communication prescribed by BSP guidelines.
Payment Due Date
- If falling on weekends or holidays, payment due is extended to next business day.
- Payments at authorized centers deemed made on date received.
Application of Card Payments
- Payments beyond minimum applied first to fees, then highest interest balances.
- Original rates from promotional offers govern payment priority.
Termination of Account
- Cardholders may terminate anytime.
- Must pay outstanding balance in full or enter a payment agreement.
- Installment repayments subject to interest unless agreement violated.
Administrative Sanctions
- BSP may impose sanctions on issuers, acquirers, directors, officers for willful violations.
- Sanctions include suspension or cancellation of issuing authority.
- Criminal sanctions also applicable.
Criminal Penalties
- Willful violations punished by:
- Imprisonment 2-10 years, or
- Fine ₱50,000 to ₱200,000, or
- Both, at court's discretion.
Transitory Provisions
- Existing non-BSP-supervised companies given time to comply with regulations.
Separability Clause
- Invalidity of any provision does not affect remainder of the law.
Repealing Clause
- All inconsistent prior laws or rules repealed or modified accordingly.
Effectivity
- Law effective 15 days after publication in Official Gazette or two national newspapers.